Plasminogen activator inhibitor-2 (PAI-2) is well documented as an inhibitor of the extracellular serine proteinase urokinase-type plasminogen activator (uPA) and is expressed in activated monocytes and macrophages, differentiating keratinocytes, and many tumors. Here we show that PAI-2 has a novel intracellular function as a retinoblastoma protein (Rb)-binding protein. PAI-2 colocalized with Rb in the nucleus and inhibited the turnover of Rb, which led to increases in Rb protein levels and Rb-mediated activities. Although PAI-2 contains an LXCXE motif, Rb binding was primarily mediated by the C-D interhelical region of PAI-2, which was found to bind to the C pocket of Rb. The C-D interhelical region of PAI-2 contained a novel Rb-binding motif, termed the PENF homology motif, which is shared by many cellular and viral Rb-binding proteins. PAI-2 expression also protected Rb from the accelerated degradation mediated by human papillomavirus (HPV) E7, leading to recovery of Rb and inhibition of E6/E7 mRNA expression. Protection of Rb by PAI-2 begins to explain many of the diverse, uPA-independent phenotypes conferred by PAI-2 expression. These results indicate that PAI-2 may enhance Rb’s tumor suppressor activity and suggest a potential therapeutic role for PAI-2 against HPV-transformed lesions.